The governments of most of the major regions of the world
have either begun or intend to establish aggressive targets to
support the "green" transformation, with many looking to
achieve carbon neutrality by 2050 and some – including
Europe and the US – looking to make big cuts in carbon
dioxide and other greenhouse gas (GHG) emissions by 2030. This
presents both opportunities and challenges for the global
"It has come to the point that the green agenda can no
longer be ignored by any government," Sergey Donskoy, metals
and mining analyst for Société
Générale, said. Robin Bhar, an independent
analyst at RBMC, agreed, declaring, "We have come to a point of
no return where we are wrecking the planet and where we need to
'build back better’ to find a way to curb GHG
emissions and global warming."
The problem, however, is that a lot of the plans that
various governments have been putting forth are just that
– plans or promises – and, according to
Michael Haigh, head of commodity research for
Société Générale, at this time it
is still uncertain how long it will take for these governmental
policies to actually be implemented and when and by how much
they will impact metals demand.
Right now, recent government policies could only be
described as a "patchwork", Laurent Chokouale Datou, vice
president of the International Copper Association said, given
that there is not any uniform set of rules, regulations or
policies that apply globally.
Geordie Wilkes, head of research for Sucden Financial, noted
that Europe, as part of its Green Deal initiative, is the
furthest ahead in terms of green policy. But, like the European
Union, the United States, the United Kingdom, Japan and China
are all looking to achieve carbon neutrality by 2050, in
addition to other governmental policies on the environment.
While decarbonization has become a global priority, there
are many factors that play into who is doing what and to what
extent. One such factor, according to Jean Simard, president
and chief executive officer of the Aluminium Association of
Canada, is geographical location. "Many of the countries that
have already been doing something about this are those that
have natural endowments or other advantages granted to us by
our geographical location while some others still have a long
way to go because they are at the wrong place at the wrong
time," he said, noting that hydropower-based regions tend to be
more northern while many industries, including metals
producers, in the south tend to be more reliant upon coal-based
The goal of truly getting to net zero emissions globally
could be an illusion, Philip Gibbs, senior metals and mining
analyst with KeyBanc Capital Markets, maintained. "But we can
move the dial and even eventually get close to net zero," which
is something that both governments and companies are being
pressured to do.
Europe has been a pacesetter in terms of not just announcing
green initiatives, but in actually taking some concrete actions
to put them into play, John Mothersole, director of research
for IHS Markit’s pricing and purchasing service,
According to Pål Kildemo, Norsk Hydro’s
chief financial officer, governmental policies aimed at
environmental transformation have been on the European agenda
for some time. He said that the European Green Deal –
an action plan for the investments and financing tools needed
to boost efficiencies and the better use of resources in an
effort to create a cleaner, circular economy while also
restoring biodiversity and cutting pollution – is one
such action, but that the European Union also has a proposed
climate law that, if passed, would take what is now just
political commitments and turn them into a legal
John Anton, associate director of IHS Markit’s
pricing and purchasing service, observed that Europe is also
looking very hard at imposing a carbon border tax, which he
said would make a lot of sense as long as other regions do the
same and that they do not set the price of the tax so high that
it adversely impacts the domestic industry and results in some
manufacturers abandoning Europe completely.
Donskoy observed that Europe started its journey away from
fossil fuels some time ago – a move that is already
resulting in a dramatic decline in coal consumption for energy
generation. "It will snowball to include other countries and
regions that had been hesitant," he said, noting that so far
most countries focus on the development of renewable energy
generation capacity, particularly wind and solar. "Hydropower
also fits into this, but it is a bit different given that many
mature economies don’t have a lot of underutilized
hydropower potential," Donskoy added.
These moves are also branching out to some neighboring areas
of green power, Donskoy said, including the development of
energy storage facilities and the implementation of new
solutions for distributed generation, as well the rollout of
larger electric vehicle fleets.
Wilkes pointed out that certain growing economies, such as
Argentina, Saudi Arabia and Turkey, are less advanced in
stimulus plans for green initiatives. Donskoy noted that some
other countries, such as Russia, do not yet have a coherent
state policy aimed at the transition to a zero-carbon
Both the US and China have started to look at certain
actions, "But even if they do everything they can to get
greener and to use metals to do that, the Earth
doesn’t care where the carbon is coming from,"
Haigh pointed out. "If other places are still polluting heavily
and not transitioning, then it makes it a lot harder."
In the US, over the past few years under the Trump
administration there had been fewer green initiatives and even
some reversal of previous moves, Kildemo said, pointing to the
nation’s exit from the Paris Climate Agreement in
that period. "But under the Biden administration, the US has
been committed to address environmental challenges, including
the climate crisis."
That was not surprising. "We knew that Biden would pursue a
green agenda," Philip Bell, president of the Steel
Manufacturers Association said. And that is what he has done.
Almost immediately after he was inaugurated as president, he
rejoined the Paris Climate Agreement.
While it does not immediately impose any requirements, Paul
Balserak, environment vice president at the American Iron and
Steel Institute (AISI), said that re-entering the accord
demonstrates a high-level commitment.
Bell noted that in February the US administration announced
a $2 trillion climate plan to significantly escalate the use of
clean energy in the electrical grid as well as the
transportation and building sectors. In April it was announced
that the federal Environmental Protection Agency (EPA) is
planning a series of actions to advance environmental justice
in certain marginalized communities.
Balserak noted that the Biden administration has announced
its intention to reset light vehicle fuel efficiency and
emissions standards close to where they had been under Obama
before the Trump administration rolled them back. There is
still some debate, however, as to where exactly they will be
set when the regulation is finalized this summer.
Wilkes said that California environmental standards are also
likely to return to where they had been during the Obama
According to Christopher Plummer, managing director of Metal
Strategies Inc., the biggest environmental push in the US came
from Biden targeting a 50-52% reduction of GHG emissions from
their 2005 level by 2030. This, he said, would be four times
the rate of emissions reduction than the US has achieved over
the past 15 years, given that, according to the EPA, the US
reduced GHG emissions by 10% between 2005 and 2018. "This would
seem to be a very challenging goal to meet without doing
significant damage to the economy," he said.
The California-based Citizen’s Climate Lobby
states on its website that climate change threatens
America’s economy and maintains that a quick path
to reaching Biden’s goal would be by raising the
price of carbon, calling that "a tried and tested tool" with
more that 45 countries around the world already doing
Simard said that while the US currently has some regional
carbon pricing mechanisms – most notably a cap and
trade system in California – they are limited in what
they can achieve as those systems are not interconnected with
As is usual, the regulatory side of things in the US is
moving a little quicker than the legislative side, even with
several pieces of legislation that deal with carbon emissions
broadly and with carbon and GHG emissions components in other
legislation, Brett Smith, AISI’s senior director
of government relations, noted, given that in the current
political climate is it is difficult to get the unanimity in
each party to move any legislation. For example, he said that
even with the support for electric vehicles on Capitol Hill, it
will be difficult to progress carbon reduction mandates under
the guise of the proposed infrastructure legislation despite
some recent attempts to do that.
While the US is in a very partisan environment, Tom Dobbins,
president and chief executive officer of the Aluminum
Association, said there is growing bipartisan consensus for the
need for major investment in such hard infrastructure as roads,
bridges and the electric grid, which, he said is the backbone
of the US economy.
Gibbs noted the importance for changes to be made in Chinese
policy, given that the country accounts for a quarter or more
of the world’s emissions.
Wilkes said changes have begun in China, with the
country’s policies becoming increasingly
environmentally focused with the nation’s 14th
five-year plan placing more emphasis upon renewables and better
growth as opposed to pure industrial growth, including a
reduction in the carbon intensity of a lot of
As part of its goal to achieve carbon neutrality by 2060,
China plans to focus on developing its non-fossil energy
sources, including wind and solar power and constructing more
hydropower bases in southwestern China. "I am pleasantly
surprised that China has been going down the green path as
quickly as they have," Haigh said.
Some industry observers question to what extent China will
follow through on its plans. "China tends to talk a good game,"
Mothersole said, noting that while the nation is heavily
subsidizing its electric vehicle (EV) industry, at the same
time investments in energy-intensive heavy industries continue.
And while China has added significantly to its solar, wind and
hydropower generating capacity, it still has a large amount of
coal-based generation capacity.
"All of this is having a significant impact on metals,"
Wilkes said, including pressure to reduce China’s
carbon dioxide emissions and to increase environmental, social
and governance (ESG) standards.
Bhar agreed, stating, "Achieving this green revolution will
result in much higher demand for metals with most metals being
winners." He said that it is almost guaranteed that there will
be a surge in demand over the next 20-40 years, which will
require more supply – possibly at double current
levels, which has made some people question whether there will
be enough supply in place.
This view is echoed by the International Energy
Agency’s (IEA’s) recent "Role of
Critical Minerals in Clean Transition" report, which said that
it will bolster a wide array of metals and minerals, including
copper, nickel, cobalt, lithium, cobalt, manganese and rare
earths between now and 2040. Demand for other metals, including
aluminium and steel, is also expected to see significant growth
with this transition.
According to Haigh, while at present about 20% of copper
consumption and 10% of nickel consumption is used for green
applications, copper consumption for those applications is
expected to increase to about 40% and for nickel consumption to
about 70% by 2030.
Carlos Risopatron, director of economics and environment for
the International Copper Study Group (ICSG), said that,
according to ESG analysts since the global copper market is
resource constrained, to meet governmental environmental
policies companies throughout the copper supply chain will need
to eventually decarbonize all the metal’s supply,
which will require innovation and investment at every step in
Datou pointed out that investments in decarbonization,
including the use of more renewable energy sources and
electric- or hydrogen-powered trucks, is not new, but that the
rate has clearly been accelerating.
Bhar pointed out that supply chains for many metals
– including copper, iron ore and tin – are
already under strain because of the closure of some operations
and the delay of some new projects or new mine openings because
of the Covid-19 pandemic. He said that metals supply
chains will likely be even more strained going forward as
manufacturers look for more for more copper, nickel, aluminum,
cobalt and steel, given the increased demand for EVs and EV
charging infrastructure, wind and solar farms, energy storage
systems and other things supporting the green
The future impact is likely to vary metal by metal, Kildemo
observed, maintaining that while it creates opportunities for
green players to increase their profitability, the robustness
of their product offerings as well as to make further
decarbonization moves, it is more challenging for players that
are further behind and need to make major investments to get to
a better position – even with increased governmental
While the properties of a metal and its recyclability helps,
he said that making further improvements involves looking
throughout the value chain to see how to progress from the
present position to as close to net zero as possible. For
example, Hydro is not only changing the electricity fuel source
at its Alunorte alumina refinery from coal to natural gas, but
is also investigating the possibility of replacing that natural
gas with hydrogen and to use some technologies that are
currently in development, such as carbon capture and
inert-anode carbon-free smelting technologies that Hydro, Rusal
and the Alcoa/Rio Tinto Elysis joint venture are researching
for aluminium production.
The steel industry also continues to move in the direction
of being more environmentally responsible, Gibbs noted. That
includes growing its share of electric arc furnace steelmaking
and the greater use of alternative irons units such as direct
reduced iron and hot briquetted iron, he said, adding that
there are expectations that over time the industry will be
using more off-gas collection and more renewables.
Plummer said that over time there could be more use of
hydrogen to displace fossil fuels both in steelmaking and in
iron ore pellet plants. Boston Metal is researching a
technology to use electrolysis as an emissions-free process for
the reduction of iron ore.
"There is a massive opportunity for metals and mining
companies to do things the right way, including righting
previous wrongs," Wilkes said. The challenge is that this will
result in an increase in the cost curve, which some fear could
slow the transition to a greener economy. Nevertheless, Wilkes
said that metals companies will invest more into renewable
electricity feeds for their production process and in new
production technologies, which could increase demand for
Bell said that to some degree recent environmental policies
have seen mixed results with companies trying to balance the
strength of the economy with green goals. "Everyone wants a
clean environment, including clean air, clean water and clean
soil," he said.
Smith agreed with their importance, noting, "These issues
aren’t going away. Interest will only increase
from policy makers and other stakeholders. Because of that
companies will continue to work to build upon the successes
that they have already achieved and to help their customers
meet these environmental goals as well."